Shop Smart, Sell Smarter: Navigating the Internet Transactions Act of 2023

The internet is a vast platform for growth — whether for personal or professional gain. Similarly, small businesses thrive in the online marketplace, finding solace in this medium, as they can reach and connect with people in all walks of life within arm’s reach, in different parts of the world.

If there is one thing that people from all walks of life rely on in these modern times, it’s accessing and relying on the web for anything necessary, as it offers an unparalleled gateway to knowledge and convenience. A small business owner can manage their operations smoothly online, and it is a gateway to help their business grow. It empowers consumers to make better-informed decisions with just a few clicks.

While e-commerce is growing, so is the law. Now, let’s fathom what the Internet Transactions Act of 2023 is, and how it is relevant to your online business.

What is the Internet Transactions Act of 2023?

The Internet Transactions Act of 2023 (ITA) has been created to adhere to the fact that growth is happening. Under the Republic Act No. 11967, which was signed into law by President Marcos Jr. on December 5, 2023, it marks a significant milestone in the e-commerce space of the Philippines. It is to “promote and maintain a robust e-commerce environment in the country by building trust between online merchants and online consumers”, as the state “recognizes the value and potential of the digital economy to increase competition and improve productivity”.

The state also assures effective regulation of e-commerce with an aim to protect data privacy and consumer rights, while encouraging innovation and highlighting healthy competition, intellectual property rights, secure internet transactions, and upholding high-quality product standards while complying with environmental and safety regulations.

With the massive growth of digital transactions and the rise of online shopping since the COVID era, creating a legal framework such as the ITA ensures fair accountability and consumer protection.

ITA’s Scope and Reach

The ITA applies broadly to the following:

• Business-to-Business (B2B) and Business-to-Consumer (B2C) internet transactions;
• Where one party is located in the Philippines; or
• Where the online merchant, platform, or e-retailer “avails” itself of the Philippine market and maintains “minimum contacts” in the country

This extraterritorial reach shall also ensure that overseas businesses or merchants who offer goods and services to Filipinos must also comply with the ITA.

However, it is excluded with the following:

• C2C transactions, which are done for personal, family, or household purposes; and
•  Online Media content – the Act does not include digital press or even streaming services

The Internet’s New Boss: The E-Commerce Bureau

Under the Internet Transactions Act of 2023, the Department of Trade and Industry (DTI) is mandated to establish an internet watchdog: The E-Commerce Bureau. It shall be created within six (6) months after the law’s effectiveness date. The powers and functions of the bureau include:

•  Formulate policies, plans, and programs for the development of e-commerce;
• Monitoring and implementing compliance with the Act;
• Promote efforts in enforcing the registration of digital platforms and online merchants with the Bureau and require providing information that is necessary for policy-making and program development while observing the principle of minimization and proportionality in lieu of data privacy;
•  Identify gaps in terms of e-commerce regulation;
• In lieu of the ‘no-wrong door policy’ of the DTI, receive and business and consumer complaints on internet transactions and refer them to the appropriate government agency;
• Collaborate, when necessary, with the DTI Secretary and any entity or government agency to take action on any matter that may hinder e-commerce’s growth;
• Conduct investigations, monitor the regulation, design, and educate consumer campaigns across all persons to help identify and reduce digital scams and fraudulent acts;
•  Jointly work with the Bangko Sentral ng Pilipinas (BSP) and other relevant agencies for including, but not limited to, creating frameworks for the usage of digital payment systems; and
• Establish and participate in formal inter-agency cooperation mechanisms involving law enforcement and other regulatory bodies.

E-Marketplaces, E-Retailers, and Platforms: Duties and Responsibilities

The ITA outlines the following responsibilities for the stakeholders:

E-Marketplaces and Digital Platforms:

• Register and verify all sellers from IDs, business documents, contact information, etc.;
• Product descriptions shall be accurate. From pricing, quality, packaging, and internet protocols;
• Full liability or even subsidiary is assumed once they fail to verify the merchants, or ignore any orders or requests;
• Establish a consumer dispute mechanism, deemed perished after 7 days of no contact; and
• Can plead a defense of good faith if due diligence is documented

E-Retailers and Online Merchants:

• Transparent pricing a.k.a. no hidden fees;
• Full disclosure of essential product details;
•  Adherence to the Data Privacy Act of 2012 especially for online payment in the Philippines;
•  Provision of contact and complaint channels with visibility; and
• Face fines in cases of license suspension or violations

Foreign-based Merchants/Platforms:

• To adhere to the Philippine laws set forth by the government while engaging with online transactions in the Philippines, even if the business is not physically present in the country

An Online Business Database (OBD) has been created, which will serve as a publicly accessible registry for digital platforms, online merchants, and e-marketplaces.

Consumer Responsibilities under the ITA

The new law doesn’t just protect online consumers – it gives them duties, too. As the end-users, they have the responsibility for the following:

• Conduct ordinary diligence (with reasonable care): Shoppers ought to protect themselves through seller verification and reading (with understanding) terms and conditions;
• No cancellations: Yes, this is the ‘no ghosting zone’. Following the “no whimsical cancellation” rule, cancellation is therefore not allowed when you’ve already paid for it, or if the order is already on its way to you, or the goods are perishable. Unless:
  • It is paid electronically, and the payment is still pending (not authorized by your financial institution yet);
  • Reimburse delivery;
  • Paid a cancellation fee; or
  • Have an agreement with the merchant for the cancellation.

Therefore, if the obligation has been fulfilled, cancellation is not allowed, unless otherwise stated under the Act. However, when transactions go out of hand, like having defective goods, consumers can get relief through the following:

•  Repair
•  Replacement
• Refund
• Relief under RA 7394 (The Consumer Act)

Consumers shall return the goods at the merchant’s expense unless the damage is due to the consumers’ fault. If that’s the case, a reasonable value shall be appropriated.

Enforcement and Penalties under ITA

Should there be any violation pursuant to the ITA of 2023, the law sets the following regulations:

The ITA grants the DTI the authority to:

• Conduct motu proprio (of his own will) investigations, especially in cases of fraudulent transactions;
•  Recommended cases that are appropriate for filing; and
• Coordinate with appropriate agencies to remove barriers to e-commerce

Penalties include:

•  License suspension or revocation;
•  Fines up to P1 Million; and
• Administrative or criminal charges for severe cases like data breach or IP violations

IRR Launch and Timelines

Since the IRR was issued on May 24, 2024, it outlined its enforcement processes, compliance deadlines, codes of conduct, and roles of implementing agencies. Affected parties have until November 2025 to comply with an 18-month grace period. Other online platforms require online sellers to submit the requirements as early as June 20, 2025. This includes registration in the Online Business Database (OBD) and seller verification.

Impact on the Economy and Regulation

For the digital economy, online platforms globally must ensure alignment with Philippine law or risk exclusion. Stronger data protection is expected for Filipino online consumers, which will result in regulated refunds, fewer risks of online scams, and better recourse mechanisms. This also paves the way to providing more transparent requirements to enforce accountability to online sellers, especially to smaller merchants and informal sellers.

Ultimately, for the protection of both parties, the e-marketplaces shall closely monitor the merchant activity and shall be responsible for handling disputes and potentially covering liabilities – unless they can prove that there has been a demonstration of good faith.

Finally, the collaboration of the new E-Commerce Bureau and inter-agency is key in providing uniform enforcement and harmonized consumer protection.

What Lies Ahead

Come November 2025, the e-commerce system is expected to be fully compliant. This ensures data privacy protection for both small businesses and online consumers. In order to measure success, it will involve tracking consumer complaints and providing resolution, assessment of enforcement results, monitoring the adoption of digital payments, and estimating how trust mark or code-of-conduct frameworks are being perceived.

Therefore, the Internet Transactions Act of 2023 is considered a bold and forward-looking step by the government to ensure a safer and more accountable e-commerce system in the Philippines. Its success relies on balancing enforcement and accessible compliance, particularly for small businesses or informal sellers. As we move forward towards its full implementation in November 2025, the DTI’s E-Commerce Bureau, stakeholders/merchants, online sellers, and consumers’ coordination is crucial in making this regulation a success and a safer platform for transactions.

Selling Online? Let’s Help You Stay Compliant!

We understand that as a small business owner, you want to make sure that your digital transactions are fully aligned with the new law. Now is the time to update those records and reporting processes to ensure that you are tax compliant. 

With Manila Bookkeepers, we can help you clean up your digital trail and check those compliance to-do lists. Our finance, accounting, and tax experts are here to assist with specifics while you focus on boosting your business. 

While e-commerce is booming, so are you! Book a compliance check with us at [email protected]